WASHINGTON, DC - The subcommittee on Commerce, Manufacturing, and Trade, chaired by Rep. Michael C. Burgess, M.D. (R-TX), today held a hearing to examine abusive patent demand letters. While legitimate patent assertion is a long-recognized tool for protecting intellectual property, bad actors have made a lucrative business by sending thousands of vague letters that demand recipients purchase a license for a large amount of money or risk being sued.
Federal law has failed to keep up with the evolving world of patent trolls and the costs for their targets can be steep. “I am especially concerned about the effects these fraud schemes have on small businesses. When a business receives a demand letter-especially one that is intentionally vague or misleading-many small business owners lack the tools necessary to distinguish a bogus assertion from a legitimate infringement claim," said Burgess.
Boston University Associate Professor of Law Paul Gugliuzza explained, “The letters often contain false or misleading statements designed to scare the recipient into purchasing a license without investigating the merits of the allegations."
Vince Malta, policy liaison with the National Association of Realtors, stressed the need for legislation to protect consumers and businesses that may not be well equipped to defend against abusive letters. “Patent trolls continuously expand their reach to small businesses, which are unfamiliar to the complex world of patent litigation and lack the resources and expertise to properly defend themselves. Businesses facing the daunting and costly prospect of litigation are left to either take time away from their work priorities to research and respond to a typically vague demand letter or simply succumb to the demand to avoid being sued," he said.
Laurie Self, vice president and counsel of Government Affairs at Qualcomm Incorporated, called for a balanced solution that targets bad actors while preserving strong patent protections. She testified, “A strong patent system, which has its roots in Article 1, Section 8 of the U.S. Constitution, is an essential part of America’s economic success, contributing to economic growth, higher income, and more jobs. … It is critically important to maintain a strong patent system that promotes innovative enterprises of all sizes."
This Congress, the subcommittee will continue working to craft legislation that aims to protect consumers and businesses from these patent trolls while preserving the ability of legitimate patent holders to fairly assert their rights in the usual course of business. Burgess stated, “Thus, in a new year, in a new Congress, we renew the effort to forge ahead to achieve such a goal. We again take aim to solve a small piece of the patent world that has caused some of the greatest consternation-patent trolls. I sincerely believe that a targeted solution to this problem is the best one."